Concerning the Baumol Model, Which of the Following Is Not

question 77

Multiple Choice

Concerning the Baumol model, which of the following is not correct (all other things equal) ?

• A)The optimum cash balance is higher the higher are interest rates.
• B)The optimum cash balance is higher the higher are fixed order costs.
• C)The optimum cash balance is higher the higher is the firm's total cash requirement.
• D)The optimum cash balance is lower the higher are interest rates.
• E)All of the above are correct.

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Definitions:

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values around the mean.

Six Sigma

A data-driven approach and methodology for eliminating defects in any process, aiming to achieve six standard deviations between the mean and the nearest specification limit.

Control Limits

Statistical boundaries set in process control that indicate the maximum and minimum values within which a process should operate to produce acceptable outcomes.